General Motors was going to need several tens of billions of dollars from the taxpayers, and the taxpayers didn't much want to pay for it.
But the folks at the top of the government, starting with George W. Bush and continuing through Barack Obama, knew that GM's failure would plunge the economy into an ever deeper abyss.
They had to get cash to the company. But this is politics, and they had to extract a price. Wagoner's job as CEO was a down payment.
Obama keeps talking about the need for companies to do a "restructuring." In business, "restructuring" is a bloodless word that means firing people by the thousands, closing plants and making costs disappear.
Well, for years Rick Wagoner has been firing people by the tens of thousands, closing plants and making costs disappear. He even got the UAW to fall in line.
When he was testifying before the self-aggrandizing members of the congressional committees last fall, Wagoner essentially said he'd been doing a heck of a job, but the pesky world just made things impossible for GM. I thought that argument was a mistake then, since it suggested that nothing short of long-term government welfare could save this deal.
For the government, "restructuring" seems to mean some kind of miraculous transformation that comes with a 30-year warranty guaranteeing future success.
Former Wagoner lieutenant and new CEO Fritz Henderson can't deliver that miracle. Sure, he can keep firing people by the thousands (until GM gets to the point where there aren't thousands of survivors to fire), but the key to this deal is revenue -- and then keeping plants open and continuing to employ people.
Somehow, GM needs to capture the imagination of the American people and sell them more cars at a higher profit. Bob Lutz got GM creating terrific vehicles, but that's only the first step.
Even government officials can understand the expense side of an automaker's profit-and-loss statement. Obama's auto task force will be experts there.
Where they have no clue is in how to make some real revenue appear: how to build a brand, how to generate customer enthusiasm, how to get a few hundred dollars more per vehicle.
That's the real magic in this industry.
Henderson is a brilliant financial manager, devoid of sentiment. He sees the world through the clear glasses of the accountant.
Oddly, the sacrifice at the government altar of Rick Wagoner is probably a good sign for GM's survival. It means that Obama wants to keep shooting money GM's way because he understands the catastrophe of a GM failure.
The threat of a Chapter 11 filing still looms. It would still be ultimately a death sentence because of its cost, its length, and the way it would destroy revenue.
Henderson will keep his eye on the ball: GM must survive.